• by May 25, 2005

By Hank Kim & Richard Linnett

So far, branded entertainment has been largely a robbing-peter-to-pay-paul proposition. According to an Association of National Advertisers' survey, unveiled at the recent ANA Television Advertising Forum, over half (52 percent) of the 118 surveyed marketers admitted that their branded entertainment efforts were bankrolled by their TV budget.

The survey results also showed, however, that a respectable 18 percent of those marketers funded their branded entertainment projects with "incremental" budgets, in other words, dollars not diverted from the marketing communications kitty (including everything from paid media to promotions and direct marketing). The survey didn't explain whether "incremental" budgets referred to opportunistic slush funds or actual dollars earmarked for branded entertainment in advance. Likely, this extra cash was a combination of both.

In any case, the news here is good for practitioners of the bittersweet science of branded entertainment. Marketers have the extra money and are indeed putting it aside to invest in content integration. It's about time. The wonks at Accenture recently calculated a $27 billion loss in TV ad revenue over the next five years through ad skipping and on-demand viewing. That's a wake-up call.

And it's the reason why branded entertainment divisions and companies are popping up all over the place. Clients want help navigating a changing marketplace and agencies are obliging. But putting a few new employees on the payroll, or retaining outside consultants isn't the total answer. Clients have to start thinking about contributing to the market.

Media agency people are all-too familiar with the following scenario: You find a property that strikes your client's fancy - an original, smart, creative programming or content opportunity that has the promise of delivering buzz and exposure. But chief marketing officers and brand managers walk away from it. Why? They were at the upfronts. The budget is committed, and they can't justify shifting money that was invested in a broadcast network because that would imply the investment was no good.

Too many dollars are locked up during TV's annual spending spree. The upfronts remain intact year after year, despite the annual and deafening howl of complaint from advertisers about how the event is designed to artificially inflate prices. By the time this column goes to press, scores of clients and media buyers will be nursing hangovers after a week of guzzling gratis martinis and swallowing rubber chicken at Cipriani and Tavern on the Green. We can hear it now: "Oh god, I did it again!" after laying all the chips on the house and realizing the odds are increasingly against you. Broadcast continues to lose audience share. Cable is cluttered and fragmented.

Perhaps the fact that branded entertainment producers, many of them alumni of advertising agencies, are starting to offer guarantees on integration deals will help turn the tide; that's something you can sell to your client. With guarantees and the promise of make-goods, planners can weave a branded entertainment opportunity into their budgets.

Hopefully, it won't be much longer before the ANA commissions a survey that shows Paul as well compensated as Peter.

Speaking of brands needing to re-allocate their marketing budgets to reflect a broader communications planning approach, take a look at the $12 billion video gaming industry. Pundits have predicted that this nascent ad market will begin to rival that of network TV in the next five years. Mitch Davis, CEO of Massive, the online ad-serving network, predicted the marketplace >> >> will reach $2.5 billion. Jay Horowitz, a Jupiter analyst, took a more cautious yet still optimistic view and predicted $1 billion in ad sales for the United States by 2010.

While critics could accuse Davis of a self-serving hyperbole, there's no denying that console, pc, and online gaming offers brands a high-engagement marketing platform. While many consumers may be watching primetime TV out of the corner of their eyes as they surf online and listen to the radio, gamers are singularly focused on the task at hand and thus are more likely to engage with brands.

So marketers, the next time someone from Electronic Arts, Activision, or WildTangent leaves you a message, you'd be well-served by returning the phone call.

Hank Kim and Richard Linnett are directors of MPG Entertainment. (hank.kim@mpg.com and richard.linnett@mpg.com)